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282. Memorandum for the Record by the Deputy Director for Plans, Central Intelligence Agency (Wisner)1

SUBJECT

  • Conversation with Governor Stassen August 19, 1953, concerning FOA support for Zahedi regime

1. Colonel White and the undersigned called upon Governor Stassen at his office this afternoon in order to follow up on earlier conversations between Governor Stassen and the Director in which Governor Stassen had indicated that his agency would be in a position to move promptly to the support of the new regime with new or stepped-up programs of economic assistance. (I had learned from General Smith just prior to the meeting with Governor Stassen that the two of them had discussed this matter at some length and were in agreement that FOA should move in with substantial economic assistance at the right moment.)

2. I explained the current situation to Governor Stassen, who appeared to be fully aware and appreciative of the significance of the entire matter. He approved of our sending to the Embassy by our communications a statement confirming the readiness of FOA to give immediate and favorable consideration to new programs of financial and economic assistance and requesting advice as to the types and kinds of programs most urgently needed and best calculated to have the desired effect.2 He enlarged upon this with a recommendation to the effect that the most appropriate way of launching this aspect of the matter would be for the Embassy to suggest to Prime Minister Zahedi and/or the Shah that he (they) should address a communication to the President requesting economic aid. Governor Stassen said that it would look very strange and would not be at all appropriate for the US Government to rush forward with a volunteering of aid and that it would be such more logical and reasonable for the President to reply to an appropriate request. The Embassy should make sure that the request is couched in the proper language which should be somewhat as follows:

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The Prime Minister should state that Iran has been through a most difficult and exhausting period of economic and financial chaos; that the new government has definite plans and programs for the financial and economic rehabilitation of the country and proposes to move as rapidly as possible to get the country on a sound footing; but that there is the greatest need for immediate assistance to tide the country over during the short-range period and also to enable the programs of agricultural and economic improvement, that the new administration has in mind, to be launched.

The President could reply to such a request stating that he was most sympathetic to the trials and problems of the country of Iran and its people, that he had taken note of the determination of the new government to do everything within its own possibilities to help itself, and that he understood the need for immediate assistance to tide over, etc. He could also say that accordingly he had directed the Foreign Operations Administration to proceed immediately with the development of appropriate programs of support.

3. Governor Stassen thought that we should get off this additional guidance to the field in very short order, but he wished to have us check it with General Smith before doing so. He was particularly anxious to be sure that General Smith would approve of this approach, as being the right one.

4. Governor Stassen also recommended that the Ambassador take up this matter at the earliest feasible moment with Mr. Warne and obtain his assistance and guidance. He explained that Mr. Warne is a very able and energetic representative of FOA who should be brought into the act and who should be able to make a substantial contribution—and also since Mr. Warne will have to assume responsibility for the administration of any new programs that may be developed.

5. I pointed out to Governor Stassen the fact that our representatives had put us on notice of the fact that Zahedi’s appreciation of the financial situation was unrealistic and that he had some very fanciful notions concerning the feasibility of certain programs for social and economic betterment. Our information further indicated that Zahedi would require some very firm and realistic guidance, and that he had been warned against making impossible promises in his early speeches. (I showed Governor Stassen the reports of the early speeches which indicate that Zahedi has not been too mindful of this advice to date.)

6. Concerning the possibility of our receiving help from FOA on the $5 million immediate requirement, Governor Stassen said that he did not think that FOA could very easily do this. He did not believe that it was appropriate for him to provide cash to us for secret payments, and he said that he thought this was “exactly the kind of thing we (CIA) have our reserves for—and that we (CIA) should draw upon our re[Page 693]serve for this kind of money.” He went on to say that just as soon as FOA programs are launched in Iran they will begin to generate counterpart funds in Iranian currency. He promised to do his best to make substantial amounts of such counterpart funds available to us in partial “repayment” for our outlay and also to provide us with funds which will probably become necessary for further operations to shore up the new regime. I pointed out to Governor Stassen the continuing necessity for maintaining security with respect to this entire affair. I said that there had been already a great deal of speculation in the press of the free world and direct accusations of US intervention in the Communist press and radio broadcasts. Governor Stassen fully acknowledged the importance of maintaining security and said that he would be very mindful of this factor in his own dealings. He also agreed that for the present our communications facilities should continue to be employed for all sensitive aspects of this affair and, moreover, he stated that he would clear with us any communications which he might wish to send at a slightly later date to the Embassy or to Mr. Warne.3

Frank G. Wisner 4
  1. Source: Central Intelligence Agency, DDO Files, Job 79–01228A, Box 11, Folder 14, Iran 1951–1953. Secret; Security Information.
  2. No specific telegram has been found. However, in telegram 633 to Tehran, August 27, the Department expressed its concern over obtaining the best psychological effect in Iran from any announced aid figure. Therefore, it suggested to the Embassy that it seek a specific request from the Zahedi government, in order that the U.S. Government might then be able to offer a specific amount that would correspond to Iranian expectations. (National Archives, RG 59, Central Files 1950–1954, 888.00–TA/8–2753)
  3. At the bottom of the page is a typewritten note that reads: “8/21/53. Colonel White—Acting DD/A stopped and left the following message in response to FGW’s inquiry: ‘The memorandum of conversation with Governor Stassen is in my opinion entirely accurate and I have no changes to suggest.’ BJM”
  4. Printed from a copy with a stamped indication that the original was signed.